Airbnb CEO Brian Chesky has resorted to pleading with New York City and New York state to take money from his company’s coffers: $21 million of it, in the form of a year’s worth of occupancy taxes his room-renting site would pay if it could. The problem is, these governments can’t take it because the law has no mechanism for allowing short-term residential rentals. Chesky:
We are a young company and there are a lot of subjects to tackle when it comes to homesharing, but New Yorkers told us time and time again that paying their fair share was their top priority. We heard them loud and clear. We examined the issue and the thousands of different tax laws that govern homesharing and vary from city to city and block to block. And we want to act now to help resolve this matter for our community by collecting taxes and sending millions of dollars to Albany and City Hall.
But today, officials in New York tell us that current tax laws prevent us from collecting those taxes, and even if we did, the government couldn’t take the check. The result is bad for everyone.
Airbnb once shied away from collecting and paying those taxes, but it’s become clear that not doing it is on the top of the list of issues law enforcement and other officials had with the platform. A spokesperson for the attorney general of New York said this winter that, “New York can’t afford to leave this money on the table.” And Airbnb has embraced the idea of paying them with the zeal of a convert.
That’s in part because not doing so is one of the easiest critiques to make of Airbnb. Perhaps single-unit occasional renters don’t need the same safety protections that hotels are required to have. And how many people are really going to rent Airbnb rooms for prostitution sprees? But it’s not entirely clear why, above some minimum threshold, those renting for profit shouldn’t pay an occupancy tax on that business transaction.
The maneuver is both clever and a tad heavy-handed all at once. One of Airbnb’s most fervent opponents in the New York State legislature is Senator Liz Krueger, but Krueger also really doesn’t like tax breaks for corporations. Take the $21 million and it validates the Airbnb business model. Refuse it, and you get people wondering if the state isn’t sacrificing real money on the altar of Luddism. “I hope,” writes Chesky plaintively, “policymakers in Albany let us contribute more to New York.”
Nancy Scola is a Washington, DC-based journalist whose work tends to focus on the intersections of technology, politics, and public policy. Shortly after returning from Havana she started as a tech reporter at POLITICO.